With a background in economics and public policy, I've covered domestic and international energy issues since 1998. I'm the editor-in-chief for Public Utilities Fortnightly, which is a paid subscription-based magazine that was established in 1929. My column, which also appears in the CSMonitor, has twice been named Best Online Column by two different media organizations. Twitter: @Ken_Silverstein. Email: ken@silversteineditorial.com

Coal Kills Obama Nomination But Critically Wounds Itself

Score one for coal-backed interest groups, which blocked the nomination of President Obama’s choice to become the chair of an obscure federal agency that regulates pipelines and transmission wires. While the victory may boost their morale, it holds little merit and it is firing up that industry’s nemeses.

LAS VEGAS, NV - AUGUST 13: (L-R) President of the Center for American Progress Neera Tanden, U.S. Secretary of Energy Ernest Moniz and Chairman of the Federal Energy Regulatory Commission Jon Wellinghoff speak during the National Clean Energy Summit 6.0 at the Mandalay Bay Convention Center on August 13, 2013 in Las Vegas, Nevada. Political and economic leaders are attending the summit to discuss a domestic policy agenda to advance alternative energy for the country's future. (Image credit: Getty Images via @daylife)

At issue had been the nomination of Ron Binz to replace Jon Wellinghoff as chair of the Federal Energy Regulatory Commission, which ensures the permission of vital infrastructure and which guarantees energy producers fair access to it. It’s a de-facto judicial position and one that takes its orders from Congress. Oddly, the coal lobby took on this would-be appointment, rallying its friends at the Wall Street Journal along with key U.S. Senators on the energy committee. As such, the lobbyists were able to kill the appointment, which has almost no jurisdiction over the coal industry or the terms that define climate change.

“In reality, it was over,” says Binz, in a discussion with this reporter. “I could not force a vote of the Senate Energy and Natural Resources Committee,” which would then pass along its recommendation to the full chamber. “Since I would have lost a formal vote, the chairman would not want to schedule it. Other options were blocked, too, by the ‘lock down’ of Republicans against my nomination. Bottom line, there was no option other than to withdraw. It is really disappointing.”

Why would conservatives and coal-funded political lobbies coalesce in their opposition toward Binz? Why not pursue Gina McCarthy, who now heads the U.S. Environmental Protection Agency and whose agency writes the rules by which heavy industry must live? Binz was an easier target, someone who had been unknown outside of energy circles and someone who the coal lobby could quietly defeat. It had no such chance with McCarthy, as the debate would would have been broadcast on national television and it would have harmed its chances to subtly dilute climate change regulation.

With Binz, though, coal groups may have critically wounded themselves. The FERC nominee’s case was, in fact, nationally spotlighted. The travesty that this man suffered at the hands of self-interested groups is a national disgrace. Binz’ ‘crime?’ Helping to usher in renewable fuels, as well as the use of more natural gas generation, while he was chair of the Colorado Public Utility Commission. By extension, these efforts came at the expense of older coal units, whose advocates say could have been economically retrofitted.

“Ron Binz is a good man,” says Jon Wellinghoff, FERC’s chair since 2009. “He is eminently qualified to be the chair of the FERC, and who lied to no one during his confirmation process. To those who say or suggest otherwise, we should all question their motivation, objectives and competence, and the motivation of the people who are advising them.”

Wellinghoff, whose remarks were made to this writer, was joined by 11 other bipartisan FERC commissioners — both current and former — in their endorsement of Binz. One was Nora Mead Brownell, appointed by President Bush II, who told this reporter that both Congress and the White House should “understand the implications” of the rough-and-tumble confirmation process.

Prediction: U.S. officials untied financially or politically to the fossil fuel lobby and the patronage that it doles out will ensure that the next round of coal regs on existing plants are thoroughly peppered with toxic rules. Recall that the EPA just released its proposals for all future coal plants, essentially requiring them to be as clean as combined cycle natural gas plants.

Meantime, the coal lobby’s actions may also work to officially kill the Keystone XL Pipeline. President Obama, after all, has shown little interest in pursuing this fight. Now that his political opponents have torpedoed one of his would-be foot solders, he may decide to permanently sideline this project.

What does the coal lobby have to say? The American Energy Alliance, which is a group funded by fossil fuel interests, calls Binz a “radical,” whose “regulatory bias” would have jeopardized “just and reasonable electricity prices.” Such an appointment, it adds, is part of President Obama’s grander scheme to hamper American commerce with climate change regulations.

“The Obama Climate Action Plan is about restricting access to America’s vast resources of coal and natural gas, which together supply approximately two-thirds of our nation’s affordable electricity,” says Thomas Pyle, head of the American Energy Alliance. “Ron Binz was only a part of that plan.”

Anyone who the president would choose for key energy positions is going to hold similar views. Those interest groups averse to that nomination or potentially others would be better served pitching directly the American people and trying to get their candidates into elected positions.

No doubt, fossil energy producers have a sound theme: Global energy use will likely rise by 30 percent over the next 25 years, and coal, natural gas and oil will remain critical fuel options. Why? Because they are energy-dense and they can be stored, making them reliable sources. Green energy, they continue, is not yet mature, meaning that all extractive developers will need less restrictive laws so that they can help meet the expected future demand.

As such, Obama embraces natural gas as a bridge fuel, saying that it could ease coal-related pollution. He has also endorsed an all-of-the-above energy strategy that relies on pushing all fuel forms to be the best that they can be.

Coal factions, meanwhile, had aimed their full arsenal at Obama during the last two election cycles. They lost, and badly. Could it be that the Binz upholds the same message — one that says that we need to produce and to deliver electricity in the cleanest and most efficient manner? Could it also be that the same industry is fearful of losing an even greater share of the U.S. electric generation pie?

Binz, like Obama, believes in the future of coal — but one that requires investments in best-available technologies. It’s not a radical message, even though the vested interests — and to use Pyle’s words, ‘crony’ benefactors — want to spin it as such. It’s a vision that aspires to create varied tools and new opportunities in a field crying out for innovation. Binz represents that thinking and his defeat is unfortunate, but it is not the last word.

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The author misses the mark here. Ron Binz was nominated to chair a commission whose mission is to ensure just and reasonable electricity rates for American consumers. Ron Binz’ record is not reflective of someone interested in carrying forth that historical mission. Ron Binz, in both his words and his deeds, is an activist regulator with an obvious bias against coal and natural gas. Read his withdrawal letter to the President, which confirms these biases even after denying them to the Senate. That Mr. Binz was not truthful to the Ranking Member of the Senate Energy Committee and that Mr. Binz greatly exaggerated his role in approving a coal fired plant in Colorado to West Virginia Democrat Senator Joe Manchin has as much to do with the demise of Ron Binz than those of us who opposed his nomination. In other words, blame Binz for being Binz. Ron Binz had a PR firm, Tom Steyer foundation money, and Harry Reid staffer-turned lobbyists working to advance his nomination. He has nobody to blame but himself – and his record – for his poor showing on the national stage.

And for the record, we were very critical of Gina McCarthy’s nomination as well because of her equally disturbing bias against the affordable energy that powers our economy. It is unfortunate that she did not suffer the same fate.

Finally, it is the President’s prerogative to nominate anybody he chooses to run his agencies, but he doesn’t get a rubber stamp.

Tom, I appreciate your sentiments here. And while I’ll let others respond to most of what is said here, I’ll take a few moments and discuss a couple of your points. First and foremost, I’m unclear as to why you feel Mr. Binz is anti-natural gas? I know: His comments that it has a 30-year lead time, or something to that effect, is still consistent with the ‘bridge fuel’ philosophy of the Obama administration. And, if in 30 years, sustainable fuels are not to where they need be, then there’s several more decades of shale-gas in the ground. I don’t think anyone would pull the plug on natural gas, which — for now — is less expensive than coal-fired electricity. So where’s the bias? If I run a utility, I want to burn the cheapest and most reliable fuel, which will be — for some time — natural gas. Even if you use wind or solar power, it will need a back-up fuel such as natural gas. As for coal, its issues are more economic than legislative or regulatory. All Mr. Binz is saying is that if coal wants to lock in a future, it will need to invest in best-available technologies. Expensive? Yes. Radical? No, but only if you want to buck that line of thinking. It’s a necessary move not just for coal but for all fuel forms, given the economic, legislative and regulatory realities.

On the PR issue: If I knew I was going to have the full fossil fuel army headed my direction during the confirmation process — one that WSJ fired the first volley — I, too, would do what I had to do offset that attack. But you know that and you are trying to score to some political points here. After all, the Washington Insider crowd knows how the game is played — on both sides of aisle. Thank you again for considered thoughts. Ken

Fossil natural gas and biomethane are exactly the same stuff, CH4. They can be mixed together in any proportion with no loss of function in any application.

Biomethane can be produced, low tech and low cost from any type of organic material at all. Since methane is a gas, it is easy to remove polluting impurities before it is used(unlike coal and petroleum).

So, your points about natural gas are well taken, it can do anything we need doing, cleanly, economically, and it is also renewable and sustainable.

I have no problem with greatly expanding natural gas usage—-but I think we should at the same time be building out a system that produces CH4 by anaerobic digestion——the left over by products are clean water and compost(the most fertile soil possible). Both of those commodities are going to become more and more important to us as time goes on.

Fossil fuels are going the way of LPs and Film cameras. Renewables are going down in price. Efficiency is lowering bills. Fossil fuel prices can go nowhere but up, while renewables are going lower. It’s capitalism. We are lowering our energy usage while improving our lives. We will be able to drive across country, for free, eventually without stopping. Mr Binz will do the good work, somewhere else. Delivering green energy at a lower cost.

Ken – If Jon Wellinghoff thinks Ron Binz was a good choice, I am glad that his nomination was scuttled. Despite all Wellinghoff pronouncements to the contrary, reliable electricity from controllable power sources remains a fundament component of a modern, developed country. No matter how many computer models are built by people like Sanford’s Mark Z. Jacobson, reliable grid power depends on having most of the power supplied by machines that produce as much electricity as is needed at the moment it is needed.

It is only the presence of large “baseload” power plants that allows the grid operators — reluctantly, I might add — to accept unreliable power from machines dependent on the the wind and sun whenever they feel like providing it.

Though I am not a big fan of their emissions, I like the reliable power at a predictable price that coal plants produce. There are ways besides CCS to reduce coal’s emissions per kilowatt-hour to a level competitive with natural gas.

I disagree with those who assert that Ron Binz is opposed to both natural gas and coal. His actions and recent words indicate that he likes natural gas and its marketers. He has worked diligently to help them push their real competitors (coal and nuclear) out of the market as permanently as possible. Their disappearance leads to increased natural gas sales.

There is no evidence supporting the notion that natural gas suppliers have suddenly determined that they like selling their product at a price that barely pays the bills. Everything I read in the trade and investment press indicates gas suppliers and their investors are eagerly anticipating a time in the not-too-distant future when demand again exceeds supply. That will allow “the market” to dramatically bid prices back to something close to the world wide average.

That would require a tripling of current North American prices. It would lead right back to the good old days of 2008.

Another FERC chairman that implements rules that disadvantages baseload competitors to his favored combination of natural gas & unreliables would help them achieve that goal even sooner than currently expected. The Jaczko Fiasco has shown tuned-in energy industry participants and observers that obscure federal agency appointments — especially those pushed by Senator Harry Reid — require close attention and early political action.

I suggest that what you are describing to as “obscure federal agency appointments” is just industry shorthand for Non-Nuclear Industry cheerleaders. This is especially true when the NRC, which most outside the nuclear industry consider as far to cozy with the industry they are regulating, tended to rubber stamp just about everything the industry wanted, that is until 3/11/11 when the Former Chairman of the NRC saw just how close Japan came to having to evacuate Tokyo!

Now he and not one, but two of the Former PM’s of Japan have become not only Anti-nuclear but Renewable Energy supporters because they realize that nuclear energy has the potential to destroy a countries economy and is no longer worth the risk to mankind, especially since Solar (of all flavors) is getting less expensive monthly!

I look to those that loan money for a living, to be the ones that no longer support Big Nuclear because the investment numbers just don’t add up any longer!

My reference to “obscure federal agency” was an echo of the words that Ken Silverstein used in his first paragraph to describe the position of chairman of the FERC.

You are very correct. The people who make money from loaning money for a living include a high percentage of people opposed to the use of nuclear energy. That is not because they think that solar energy is a technically better solution, it is because the multination petroleum companies have a long standing relationship with banks. They produce enormous cash flows, but also require enormous capital investments, usually borrowed from banks like Citi, JP-Morgan Chase, and Goldman Sachs.

Jaczko did not turn against nuclear energy as a result of Fukushima. He was a strident antinuclear activist as a graduate student at the University of Wisconsin. My friends that led the Madison student chapter of the American Nuclear Society in the late 1990s knew Jaczko as a “go to” opposition debater when they wanted to set up a pro versus con debate about nuclear energy.

I believe his entire tenure at the NRC was an audition for his next planned job – replacing Peter Bradford and Victor Gilinsky as a former NRC commissioner on the board of the UCS.

With regard to solar energy – please see me when it can produce power reliably for 85-90% of the hours in the year. It would also be nice if it finally approached a point at which it was possible to build a solar powered solar panel factory.

Rod Please see me when nuclear can no longer produce nuclear waste or threaten society with a Trillion Dollar Eco-Disaster like Fukushima!

Until then, nuclear remains nothing more than a dangerous old technology that only still exists because the Utilities and their supporting industries possess huge influence over both the politicians and the ratepayers they are supposed to be serving, when in fact these same ratepayers are instead living as energy slaves to their own Utilities!

Of course it will, as we all know, there is no free lunch, but what must also be said is that although we cannot point to the least expensive technology for providing Energy in the near future, we can begin to phase out the most risky forms of generation ASAP to make room for whichever one that is…

Utilities are usually very slow to phase out their own power plants and unless they are urged to do so by public demand, they will always opt for extending the use of these aging plants; a practice that is no longer acceptable because of new pollution laws that affect the public’s awareness of global warming.

We are now seeing a new situation where old Utility technology is now under attack on two fronts. On one hand is the financing for new energy where Lenders are demanding that Utilities invest in only clean newer technology, instead of just adding more of the old and on the other hand, ratepayers are telling their Utilities (and the Regulators that oversee them) to either provide clean green Solar (of all flavors) or ratepayers will install it themselves, which is putting the Utilities market share in danger!

Our LNG should be rushed into service inside the USA to reduce our dependance on Foreign Energy by developing multi-fuel vehicles and building a LNG/LH2 distribution grid to “fuel” them; not shipped overseas to make big money for off shore businesses that will pay little to no US taxes! One solution would be to add a huge export tax to every cubic foot of LNG shipped outside the USA and use this tax money to further promote LNG/H2 technology!

I expect to see many new R&D breakthroughs in the near future, which will continue to lower the cost of NEW Energy and that will more than make up for the money spent to get US away from RISKY nuclear and Big Coal. The Earths resources are limited and as every more Countries strive for ever decreasing resources, those Countries that become self sufficient will be far ahead of those that are still stuck using old, ever more expensive technology!

A perfect example is gasoline and diesel which used to cost less than $2 a gallon just a few years ago now cost over $4 now in the USA, any guesses on what it will cost in another 10 years?

It is this rapid increase in Energy cost that will make the conversion to self generated electricity, a must have feature for all those that can afford it, in the very near future!

Soon all those that can afford to have a roof over their head will also have solar installed on that roof because it make good sense!

Big Coal is pulling out all the stops to get as much Federal money as possible for R&D into how to clean coal up so that they can stay in business…

Until our Politicians start looking toward the future without thinking first about what is best for Big Coal the USA will continue to slip further behind in the energy race toward ending our dependance on foreign energy sources.

By not pushing forward ASAP like Germany is now doing, our elected US Leaders are dooming the USA to Third World Status, because the cost of raw materials to catch up in the future will continue to skyrocket, while their availability decreases.

Unless the NEI, US Utilities and Manufacturers ensure that US Energy generation is:

Ever more aging and/or unsafe Power Plants will be shutdown and customers will lean towards using Hydrogen Fuel cells and/or Solar Panels. Electric customers are energy wiser everyday because their Utilities continue to make energy more expensive than it should be.

Example of what lies ahead:

OSAKA, Japan­ – In a post-tsunami revolt against conventional electric utilities, tens of thousands of Japanese homeowners have started generating their own power from hydrogen fuel cells and solar panels, turning the country into the world’s leading laboratory for overturning the traditional grid and the century-old business model behind it.

Two and a half years after a nuclear-plant disaster crippled a primary source of electricity, major home builders are incorporating the alternative technologies as a standard feature of new homes. Japan’s biggest builder of single-family homes, Sekisui House Ltd*., says more than 80% of those it produces have solar power and half have fuel cells, an emerging technology little-known in homes elsewhere.

Good article: Nuclear Plants Vexed at Prices That Shift as Demand Does http://www.nytimes.com/2013/10/09/business/energy-environment/nuclear-plants-vexed-at-prices-that-shift-as-demand-does.html?partner=yahoofinance&_r=1&

snip Energy markets “were physically designed by reliability engineers, intellectually designed by economists, and all disputes are resolved by lawyers,” said Robert E. Curry Jr., a former member of the New York State Public Service Commission. “It’s the worst of all possible worlds.”